The NBA has a salary cap for good reason, it helps with competitive balance and doesn’t allow the rich owners to just outspend other teams and introduces the notion of smart team building into the mix. The NBA has what is called a “soft cap,” which is designed in a way where you are allowed to go higher than the cap in order to keep your own players.
This is to avoid situations where teams are stuck in a bad spot with contracts and lose their best player because they are unable to offer a fair salary when his contract expires. The NBA penalizes teams heavily for going over the salary cap and later the tax line by denying exceptions that allow for teams to re-stack the deck, among other things.
The details are rather gory and boring and I don’t want this to sound like a law text but for all your CBA questions, refer to Larry Coon’s CBA FAQ Guide.
So how does this impact the league’s superstars and LeBron James in particular? Well, the NBA doesn’t work as a free market since it caps player salaries at the top with a max salary and the bottom with minimum contracts, and you must have at least 12 active players on your roster (there are exceptions to this during the season) and 15 is the max, meaning there are always a certain amount of jobs available in the NBA.
With a maximum salary limit, even if you have a salary cap there are many teams that would willingly give LeBron the price of the full salary cap and just fill out the roster with minimum salary guys around him. He’s that good and if given free rein to do whatever they wanted, owners would make decisions that are of little sense.
The salary cap during the 2013-14 season was set at $58.679 million and the luxury tax line at $71.748 million. If you add that all together over 30 NBA teams and assume that every team hits the luxury tax line you have a pool of $2.15244 billion to spend on player salaries. If each roster had the full 15-player squad that would amount to $4.7832 million per player.
The question is; how much of that pie would LeBron James get? LeBron has voiced his displeasure with the notion of a salary cap and it’s pretty fun to calculate what he would get on the open market, and according to reports he is looking to cash in on a max contract this off season.
Win shares are a pretty good estimation of a player produced value, and this year James actually didn’t rank first in that category. Kevin Durant led the league with 19.2 win shares compared to LeBron’s 15.6. Adding up all the win shares by the top 450 players who played last season (30 teams multiplied by 15 roster slots) and then redistributing the wealth based on that, here’s a look at what some of the top players would get compared to what they are raking in now:
Based on these calculations, Kevin Durant should be making 105 percent more than he is making right now and LeBron should be making more than $10 million more. This graph also shows you the value of rookie contracts.
Anthony Davis should be paid nearly four times more than he is right now based on his production. The only player on the graph who should be making less is Amar’e Stoudemire, who makes three times the value of his production.
This doesn’t take into account the fact that in the top 450 there are 38 players who shouldn’t be paid anything at all by calculating based on win shares, which obviously can’t happen. Funnily enough win shares can go negative and, for example, according to this model, Sergey Karasev, Ian Clark and Shane Larkin should have paid for the privilege of playing in the NBA.
Of course win shares aren’t the end and be all of statistics but what should be clear is that NBA superstars are generally very underpaid in when compared to the value they bring to a team.